May 12, 2009

China's soy importers stayed on the sidelines on Monday (May 11) as they were anticipating a key US government report on global soy stocks while weakening domestic soymeal prices threatened to further reduce crushing margins.

Traders said business was dull as buyers wanted to see the price movement on the Chicago Board of Trade (CBOT) after the release of demand and supply estimates by the US Department of Agriculture (USDA) on Tuesday (May 12).

The bulk of China's soy imports are carried out by the world's top trading companies such as Wilmar International, Noble Group and Cargill, which have their own processing facilities in China.

Due to China's soy procurement fervour and lower output from drought-hit Argentina, the USDA currently forecasts US soy stocks to slide to a five-year low of 165 million bushels for this season.

China, the world's top soy importer, has reduced procurement in the last two weeks after making huge purchases in recent months. China is due to import a record five million tonnes of soy in May.

The country's declining imports also dragged down CBOT soy futures nearly two percent on Monday in their biggest daily losses in two weeks.

China's soy crushing margins are likely to be in the red after Dalian soymeal futures fell on Monday as worries arose that pork demand could be hurt with the detection of the country's first AH1N1 flu human patient in Sichuan.